Side Hussle Q

boltonian

I understand that if I have a turnover of less than £1000 I do not need to declare this on my self-assessment tax return.

However, if I have a turnover of £1300 but a profit of £800 do I need to declare this? (I think yes) and will I be taxed on it?

Seems wrong that if I turned over £999 with a £900 profit I pay no tax, but if I turnover £2000 with £100 profit I would get taxed.

Could somebody please confirm

Thanks

darrensurrey

Yep. But you can carry forward a loss to offset profit:
https://www.gov.uk/government/publications/self-assessment-tax-return-sa100/how-to-fill-in-your-tax-return-2022

"Seems wrong" Welcome to the world of business! And if you're self-employed, better hope no pandemic hits. #excluded

boltonian

Thanks

Some websites (inc The Times) say that you have a £1000 allowance but this seems to contradict with other sources

uknick

First, why not claim the trading allowance and reduce your profit to £300?

Second, your second scenario would not happen as one would claim the trading allowance of £1,000 and end up with no profit.

The above all means HMRC expect a small trader to claim the trading allowance of £1,000.  This means with turnover at £1,000 or less there will be no profits to declare for tax.  Therefore, there is no need for HMRC to spend admin time, and therefore money, with tax returns that don't generate money for them.

boltonian

So....

My actual job pays me enough to be in the 40% tax band.

My side hussle turnover was £1300 but after expenses my profit was £800.

Does this mean that I get £1000 trading allowance and therfore pay no tax on the £800?

The bit I'm struggling with is whether or not I need to delare it on my self assessment tax return.

It says £1000 turnover must be declared

boltonian

Or having read a bit more, the £1000 trading allowance is in place of claiming expenses? So income of £1300 - £1000 trading allowance means I would need to pay tax on the £300?

So the £1000 bit is related to income NOT profit?

Dazed_and_C0nfused

boltonian said:

Or having read a bit more, the £1000 trading allowance is in place of claiming expenses? So income of £1300 - £1000 trading allowance means I would need to pay tax on the £300?

So the £1000 bit is related to income NOT profit?

The £1,000 trading allowance is something that can be claimed instead of actual expenses.  That is your decision to make.

You cannot claim expenses and the trading allowance.

So with £1,300 turnover it's either claim your expenses leaving a profit of £800.

Or don't claim anything for the expenses you have incurred but claim the trading allowance instead.  Leaving you with a profit of £300.

boltonian

Great thanks you, I think that all makes sense now.

This year it will definitely be better for me to claim trading allowance, next year I think it wouldn't.